The “Special Relationship,” between the US and UK, just might be dragging itself into a new era. The Donald (Trump) is already on the podium and Boris (Johnson) has just joined him. Iran, and the rest of us, hold our breath.

Two recent events show how this new era might be taking shape. One is the recent resignation of the UK’s ambassador in Washington, Kim Darroch. He was effectively squeezed out by a well-coordinated Transatlantic game plan: a selective leak, followed up by a predictable Trump condemnation and a Johnson no comment did it for Darroch. The other is Trump’s recent tweets, echoing Johnson’s earlier newspaper pieces, in which he talked of Africans’ “watermelon smiles.”

The advent of Trump and Johnson either represents a recalibration of the old WASP (White Anglo-Saxon Protestant) elite on both sides of the Atlantic, or its final stand. Or perhaps both.

The Special Relationship is of course more special to London than Washington, but it is based on a shared mythical superstructure.

Athens and Rome

A widely held notion since 1945 has been that the UK has passed on the role of the ‘global policeman’ to the US, from an exhausted London to an impatient Washington, from Athens to Rome.

If there are similar dynamics driving both the election of Trump and Brexit, it is perhaps best understood in terms of this mythical ‘Anglosphere,’ a term that connotes an historical link to the roots of English common law, the principles of separated powers, but also a wink to ethno-nationalism, that ‘our’ rules and status are someone defined by our ethnicity.

This narrative is held together by several micro-narratives, stretching back to ‘We won the war,’ – bad Germans, weak French, Napoleon and Hitler. The anti-European mythology seeps through a lot of the rhetoric of Trump and Johnson.

Other micro-narratives pervade the public space that both men now occupy. “Political correctness has gone mad” – Trump and Johnson want white, middle-aged affluent men to be able to say the things they want to say in public, after 40 years of the PC brigade telling them what is acceptable. Allied to this is the notion of victimhood. ‘We’ are the beleaguered minority now, they say. ‘We’ are the ones being crowded out. The language is one of walls, borders, whether on the Mexican border or the English Channel.

Cultural Marxism, without realising its antisemitic undertones, or perhaps being aware and gaslighting, implies that all that has undermined traditional values is culturally marxist. The word itself is designed to scare. Women’s liberation, gay rights, ethnic minorities’ rights are thus to be opposed.

The ‘mainstream media’ is leftwing, the narrative tells us. Its persistent attacks on this ‘mainstream’ media – BBC and CNN – are designed to put it on the back foot, to force it to explain itself and avoid poking into areas that threaten the status quo.

The narrative trumps facts. In fact, facts can be made and unmade at the will of the narrative, a development that plays into the spawning of conspiracy theories. Such strategies are multipurpose, used to undermine arguments and individuals that are problematic, but also to propagate alternative narratives, without the need for fact checking.

Reality bites

The reality is that the Western World faces multiple crises simultaneously. The confrontational binary nature of US and UK politics has been exposed in the last 20 years. In the UK, after the 2009-10 expenses scandal, and the current stasis in British politics, the notion of Westminster as a model for democracy has been challenged. In the US, Trump has exposed the bipartisan character of the political process.

In turn, the 2008-09 financial crisis exposed the way that the US-UK political-economy actually works. The post-crisis compact, in effect, socialised the costs of saving the banks, meaning the financial system survived, while the public purse was ransacked by austerity policies. The fairness of the system, essential to its legitimacy, has been challenged. The Thatcher-Reagan era of promoting social mobility has largely failed. The celebrity culture that acts to propagate the notion that ‘anyone can make it’ creates demands that the system cannot meet. 

Both the UK and US are essentially still low-wage economies, driven by immigration, designed to hold down wages. Structurally, both economies have seen stagnating wages, as no governments have tackled post-industrial decline and increased inequality. Neither has answered the question of what to do with the bottom 20% and now, increasingly, the middle class. Trickle down clearly doesn’t work, but there are few new ideas on the right.

The rightwing shift

The Republican and Tory parties are diving to the right, if by right we mean a form of small-state quasi-libertarian uncertainty, mixed – oddly – with nationalism and protectionism, that bears very little resemblance to old school Toryism or Republicanism.

The European Research Group (ERG) in the UK and the Tea Party (or its modern incarnations) have long called for the tearing up of what’s left of the post-war compact, by cutting taxes to the bone, slashing welfare, focusing on the financial sector, alongside privatisation and deregulation and imposing selective protectionism. It may be a recipe for ecological crisis, social unrest and international discord.

But in its bold gesture politics, the more this group appears to dominate, the weaker it may actually be becoming. Perhaps what we are witnessing in fragments is a battle of succession within the ruling parties, a struggle between the insurgents within Republicanism/Toryism and the Old Guard. Old school elites have had to invite the Tea Party/Brexit insurgents into the tent, rather reluctantly, and one of the few things that keep them together is a mutual disdain for other groups. They are thus glued together by a rhetoric of nationalism, exclusion and division. The Republicans at first distanced themselves from Trump, and Boris was never flavour of the month in many Conservative Party circles. But that changed when the Old Guard realised these harsh new noises had traction among enough of the electorate to count.

But US interests are not UK interests

Johnson’s limited leverage, meanwhile, is dependent to a large extent on offering a trade deal with the US, something that he hopes can ignite the imagination of those Brits who still believe Brexit makes sense. But it also gives Trump enormous leverage over Johnson. And it’s doubtful it will also mean that future UK access to US markets will be preferential over existing access via an EU-US trade agreement. Many believe such an agreement would flood the UK with cheap and worse quality food, undermine health standards and undercut domestic producers. In the lexicon of economic nationalism, international brotherhood is an oxymoron.

L'articolo The Donald & Boris: The Past is Just What it Used to Be proviene da InsideOver.

The discovery of a giant gas field, Tamar, off the coast of Israel in 2009 opened up a new era for the Eastern Mediterranean as an energy hot spot, but regional politics stood in the way for some years. This could be about to change. Now, with Israel and the Gulf states finding common cause against Iran, several Arab leaders are breaking longstanding diplomatic taboos on Israel. Meanwhile, Washington supports an opening of Israeli gas exploration that could help Europe diversify away from Russian imports.

Israel’s proven gas reserves are estimated at some 455 billion cubic meters (bcm), where the Eastern Mediterranean in total has about 2100 bcm of gas. The EU’s consumption of gas in 2017 was 410 bcm, meaning that Israel’s reserves are enough to supply the EU for a short-term period.

UK-listed exploration and production company Energean Oil & Gas recently made a “significant” gas discovery in the Karish North of Israel. This area has an estimated 28-42 bcm of recoverable gas. Exxon and Qatar Gas have, since 2009, discovered another giant gas field off the coast of Cyprus. Italy’s Eni has found deposits off the coast of Egypt.

Exxon is also in discussions to build a platform to expand exports of Israel’s biggest natural gas field. The liquefied natural gas (LNG) ship would allow partners to export to countries not reachable with pipelines, and avoid the need to build expensive infrastructure to connect to LNG facilities in Egypt.

Meanwhile, Cynergy Group, an investment fund based in Cyprus, is looking to spend between $5 billion and $10 billion buying natural gas assets in the region. IGI Poseidon, a 50-50 joint venture between DEPA and Edison Energia, is about to start a detailed FEED (Front End Engineering Design) study at a cost of €70 million, to look at the technical and commercial feasibility of exporting Israeli and Cypriot gas to the one global market where imports are increasing steadily – the EU.

Several alternatives are being considered by Egypt, Cyprus and Israel to transport the energy to markets in Europe. One of two competing options will likely happen: the expensive and technologically complex EastMed pipeline or Egypt’s LNG facilities, including a subsea pipeline.

Israel is pushing for the EastMed pipeline to reap political and economic dividends by having a physical connection with mainland Europe. For this purpose, Israel, Cyprus, and Greece agreed in December to conduct a feasibility test concerning the pipeline, with financial support from the EU. The project would cost over $7 billion.

Israeli and Lebanese negotiators are due to meet, with Hezbollah’s blessing, at a United Nations base to agree a delineation of their sea border. The prize is access to newly discovered Mediterranean gas fields, which can only be safely exploited once the threat of war is removed.

Egypt’s energy and mineral resources minister Tarek el-Molla has been quick to respond and promote an alternative plan. Egyptian companies have already struck a $15 billion deal for the import of Israeli natural gas. Cairo intends to attract additional resources such as Cypriot gas to become the energy and LNG hub of the region.

Israel, primarily, has been focused on Cyprus’ participation in the EastMed pipeline, because of the increased economic viability of the infrastructure due to combined Israeli and Cypriot gas resources. Tel Aviv is aware of the competing, and more favourable, Egyptian offer, compared to its relatively expensive and technically challenging proposal.

Despite ongoing negotiations with Cairo, Nicosia is also continuing its cooperation with Tel Aviv and Athens on what could become the EastMed pipeline.

The US is in favour of the EastMed pipeline, as it would provide an alternative source of energy to the EU, where currently, Russia’s gas giant Gazprom dominates the market. China also investing in the EastMed LNG sector.

L'articolo Israel’s EU Pipedreams are Becoming a Reality proviene da InsideOver.

Nigel Farage’s Brexit party in the UK, which claimed it was receiving payments of £100,000 a day during the recent campaign for the European parliament, is now facing claims it was not vigilant enough in checking small donations. But could the charges backfire against those making them?

Gordon Brown, ex-PM, is leading the charge. Brown said there were risks that democracy was being undermined if the Brexit party is allowed to accept foreign and untraceable donations via PayPal.

The Brexit party, which won 31.6% of the vote in the elections, was set up in March on a single issue, namely to drive through Brexit.

“Arron Banks, the lead funder of Leave.EU and a friend of Nigel Farage, has been under investigation. He has big contacts with Russia,” Brown said.

“We don’t know where his money comes from and yet we found out last week he has given £450,000 in payments to support Nigel Farage while Nigel Farage was in a public office in the European parliament who should have been declaring the payments to avoid any conflict of interest.”

Cash sources unknown

“I think every journalist in Britain and Europe should be digging into the funding and networking of Farage’s political vehicles and the other nationalist anti-immigration movements and parties rising right now,” says academic Emma Briant.

“It is too easy for foreign money to enter UK politics from self-interested foreign elites and enemies who don’t care about the future of British people. Nigel Farage and Arron Banks have obscured their funding sources and meetings but cannot hide the mounting evidence of close relationships to Russian officials and influence and attempts to source money from the US. Self-interested foreign money doesn’t care about the future of British citizens – it weakens ordinary Brits’ power to influence their politics and the future of Britain,” Briant says.

Others agree. “Russian money has infected the UK political process,” says Bill Browder. “There are prominent members of the House of Lords and other establishment figures who are unashamedly working for Russian oligarchs and acting in Russia’s interest in Britain. There’s so much Russian money sloshing around that it’s visible in payments to lobbyists, party finances and individual lawmakers.”

The rules of the game

In order to become a “registered supporter” of the Brexit party, a person must provide their name, address, email and phone number and make a £25 payment via a form on the website.

But, unlike most political parties, the Brexit party website has no safeguards to make sure donors are eligible to give money to British political parties.

Political gifts of under £500 made via PayPal do not have to be declared. A sum of money given to a party, however, only counts as a “donation” if it is more than £500. An official donation of £500 or more must be given by a “permissible donor,” who should either be somebody listed on the UK electoral roll or a business registered and operating in the UK. As a result a smaller donation could come from anyone in any country or organisation would not have to be sourced and declared.

In 2013, the Electoral Commission issued guidance to parties that “if a donor makes regular payments for an unspecified donation and towards an unspecified total amount, our view is that these payments should be treated as separate donations.”

These rules originate from legislation that’s now 20 years old – the Political Parties, Elections and Referendums Act 2000.

Legal balls rolling

There are already three criminal investigations into Leave.EU, by the National Crime Agency, the Metropolitan police and the information commissioner.

The Electoral Commission has said it will attend the offices of the Brexit party to “review its systems” after Brown urged them to investigate concerns over the legality of the party’s funding.

The commission has the powers to carry out live investigations during elections and issue interim statements on whether it believes there are unanswered legal questions about party funding.

An Electoral Commission statement said: “The Brexit party, like all registered political parties, has to comply with laws that require any donation it accepts of over £500 to be from a permissible source.

“It is also subject to rules for reporting donations, loans, campaign spending and end-of-year accounts. We have already been talking to the party about these issues.”

Lib Dem MEP Catherine Bearder has written to the president of the European Parliament Antonio Tajani demanding an investigation. Green MEP Molly Scott Cato has also referred Farage to the European Anti-Fraud Office.

The European Parliament’s advisory committee has said it will look into whether Farage broke rules by accepting funding from campaigner Banks.

Farage fights back

Farage accused Brown of an “absolutely disgusting smear.”

“This from the man (Brown) who was part of a Labour party who, through Lord Levy, were making a lot of big donors members of the House of Lords,” Farage said, adding that the board of the commission were all remain supporters and it, along with the two-party system, the House of Lords and the voting system, needed to be “looked at.”

“How dare he? Most of our money has been raised by people giving £25 to become registered supporters and nearly 110,000 of them now have done that. Frankly, this smacks of jealousy because the other parties simply can’t do this.”

Farage then claimied the Brexit party had come under a coordinated attack from Brown and the media.

Richard Tice, the Brexit party’s chairman and co-founder, added on Twitter that the allegations were unfounded. “The Brexit party only receives money in sterling. “I don’t sit in front of the PayPal account all day so I don’t know what currencies people are paying in, but, as I understand it, the PayPal takes it in sterling.”

Tice later demanded an apology after a BBC pundit suggested on national television that the party gets illicit support from Russia.

Counterproductive?

“Ironically,” Tom Harris wrote in the Daily Telegraph, “the Electoral Commission’s decision plays into Farage’s hands and helps burnish his credentials, not only as a political outsider (which he’s not), but also as the plucky victim of an establishment that sees him as a threat. In this last regard, he undoubtedly has a point.”

L'articolo Gordon Brown vs. Nigel Farage proviene da InsideOver.

“I will represent all European citizens in London, firstly the British but also Poles, French Spaniards, etc,” Poland’s ex-finance minister Jan Rostowski said as he announced he was standing as a London candidate in the upcoming European elections. His Change UK – The Independent Group is an anti-Brexit party founded a mere two months ago by ex-Labour and ex-Conservative MPs.

His aim is to force a second EU referendum as part of the political group which calls itself the “Remain alliance.” He believes the EU referendum in 2016 will lead “the collapse of the present party political system” in Britain, and worries that the space it is creating could be filled by people like Nigel Farage. “If the party political system is going to collapse, you want it to collapse in a good way rather than a bad way.”

The party has faced several controversies since it announced its candidates for the European elections, like other new parties. Two candidates have been forced to withdraw from the race for comments alleged to be racist.

And Rostowski, who was born and raised in the UK, but served as Polish Deputy Prime Minister and the country’s finance minister under Donald Tusk, has faced questions an interview from 2011 in which he said “a stable society is based on heterosexual relations” and stated his opposition to gay marriage.

We caught up with him in Warsaw.

1. What is the reasoning behind your decision to run for election in London? 

Rostowski: The aim is to stop Brexit, which will be very, very bad for Britain and bad for Europe. It will also be very bad for the 3.2 million EU citizens who live in Britain, some 200,000 of whom are Italians and 1 million are Poles. The British government has promised that their rights will be guaranteed, but that will only apply to those whom the government accepts are living in Britain. It’s enough to go onto the Home Office website to see that proving that you live in Britain will often be difficult for those who absolutely genuinely do. A frightening case is the Deputy Director of Ofsted, the state education watchdog, who is an EU citizen. Given his job, he’s a competent bureaucrat, knows all about filling in forms and providing the necessary evidence. Yet his application was refused. You can imagine the difficulty for ordinary Italians or Poles living in Britain. The only way for EU citizens to avoid this nightmare, is to vote to stop Brexit.  In these European elections they have the right to vote IN BRITAIN, and if they decide to, I would appeal to them to vote for Change UK, which is the most pro-European and anti-Brexit of all the parties. Of course, if they want to vote in their home country they should do that. If they do so, I urge them to vote for pro-European parties there.

2. Does Change have anything to say beyond the need for a second referendum?

Rostowski: Change believes that the Brexit referendum was a symptom of how broken British politics are, and need to be changed. That’s why it’s called “Change UK”. Britain needs a new politics that are less confrontational, involve ordinary people far more and are more ”evidence based”. To achieve this, we need to change political culture profoundly, so that experts and ordinary people can work together to come up with the best decisions. I believe this must and can be done, but not if the divisive politics of Brexit are allowed to carry the day.

3. How does British democracy need to change to survive and will this happen?

Rostowski: It will change fundamentally, because it has to. People now identify far more strongly with the way they voted in the Brexit referendum than with the party they voted for in the 2017 elections. Both main parties are split right down the middle. Neither properly represents its voters any more. Both are likely to split into separate factions or be replaced by new parties, which will coalesce around the Brexit Party led by Nigel Farage and Change UK led by Heidi Allen. A hard left, anti-European Labour Party will probably also continue to be important. If we don’t want to see Farage in No. 10 we must stop Brexit right now! A Farage premiership will deliver Britain gift wrapped and tied in a bow as a vassal state to Donald Trump. That is not something I want to see, and I am sure it is not what the vast majority of people in this country want to see, including those who voted for Brexit.

4. How will running in the UK affect your political profile in Poland & do you have ambitions to re-enter Polish domestic politics (what would need to happen for that to happen)?

Rostowski: If I am elected I will serve out the term of this European Parliament – unless of course Britain leaves the European Union. Legally, MEPs represent not only the constituency they are elected from, but all Europeans. European politicians can, and I believe should, engage in politics across the whole EU, just as in Britain Manchester MPs should engage in politics not just in Manchester, but across the UK. So, in the EP I will above all argue passionately that Britain needs more time to find its way out of this massively damaging Brexit. Not all European politicians understand that, and as a former Deputy Prime Minister I think I will have the opportunity to influence thinking in the EP on this. Second, I will work for London’s dynamic, service based economy. As a former finance minister I think I am well placed to do that.  But I shan’t stop fighting for democracy, the rule of law and equal rights and respect for all throughout Europe, including Poland in particular.

5. Populism in Europe takes differently forms (Brexit, PiS, Orban, Salvini) – but are there threads that create a recognisable movement and what can be done to combat its rise?

Rostowski: I see five common features. All the populists and nationalists are anti-European, although those who operate in countries where Europe is popular, like Poland and Hungary, try to hide that. All are happy using lies in politics. Donald Trump has just passed the 10,000 mark for VERIFIED porkies since the start of his presidency. They often use the promotion of hate against outsiders and minorities as a way of mobilising their electoral base. That happens somewhat less in Britain than in Italy, Poland or Hungary. Any minority will do: refugees, EU citizens from other countries, the LGBT community – because the purpose is simply to get the vote out. If rousing people against one minority does not “catch on” they move on to the next. For example, Law and Justice in Poland saw that attacking refugees was not working any more (because there are practically none in the country) – so they switched to the LGBT community. A fourth thing populists have in common, is that once they get power they are often incredibly corrupt financially, although their propaganda says exactly the opposite. We see this in Turkey, Hungary and Poland, and I expect we would see it in France and Britain as well, if the populists ever come to power. The fifth is that they cannot really work together across Europe, since they put a short term view of the national interest above all else. Recently, Hungarian PM Órban led the charge against Italy in the European Council over Salvini’s budget plans. Poland and Hungary refuse to help Italy out over refugees, and so on.

6. How have your views changed on LGBT issues? 

Rostowski: I was one of the first Polish politicians to criticise PiS’s vile and disgusting attacks on the LGBT community in March of this year.  PiS’ attacks on the LGBT community are an attack on the civil rights of all of us, and scapegoating of this kind, setting Poles against each other, are an attack on the whole national community. My earlier remarks (from 2011), have been trumpeted by both the extreme left and extreme right, despite the fact that my views, like those of many people, have changed fundamentally, and are now that we must have equal rights for all people to civil partnership and marriage regardless of sexual orientation. A stable society is one based on equal rights for all. Polish attitudes are also slowly changing on this. I changed my mind on civil partnerships in 2015, and those on gay marriage as a consequence of the Irish referendum.

L'articolo Polish Politician Runs on Anti-Brexit ticket in London Euro Elections proviene da InsideOver.

When Poland‘s state-run oil and gas firm PGNiG signed a 20-year deal for liquefied natural gas deliveries from the US last year and said it would be spending €200 million buying into a project to deliver gas from Norway via Denmark, few eyebrows were raised. Poland, after all, has ben one of the chief critics of increasing EU imports of gas from Russia via the Nord Stream II pipeline and announced it would not be extending its 22-year gas deal with Russian gas firm Gazprom when it expires in 2022. It is, also, one of Donald Trump’s few European admirers and has bolstered its eastern defences against perceived Russian threats.

Piotr Wozniak, President of the PGNiG Management Board, said last week that the LNG contracts signed with US partners will enable Poland to buy natural gas 20-30 percent cheaper than gas PGNiG purchases from Gazprom, Wozniak said.

“It is a matter of security and good in terms of supplies.” Gazprom has proved to be an unreliable partner, according to Wozniak.

“We also import LNG from Qatar and Norway. Our goal is to diversify gas supplies to Poland in order to bring affordable natural gas for Polish citizens, in this case – to our customers.”

The Polish question

The question thus moved to how Poland would replace Russian gas and how viable its plans are to become an alternative hub for gas imports into Europe.

Polish gas consumption is 17 bcm, with supply in 2018 from: domestic production 3.8 bcm, imports by pipeline from Russia 9 bcm (down from 9.7 bcm in 2017), LNG Imports 2.71 bcm and pipeline imports from a westerly and southerly direction 1.5 bcm, according to Wozniak.

Asked if the 4-year old Swinoujscie LNG terminal in north-western Poland was more of a political choice, given that gas prices are likely to be higher from non-Russian sources, Wozniak said the assumption was “false” and the question “politically driven.”

The project aims at creating of a new gas supply channel on the European market, which will for the first time allow the transmission of gas directly from the deposits in Norway to the Danish and Polish markets, as well as to recipients in neighbouring countries. The terminal’s capacity is being increased from the current 5 billion cubic metres (bcm) per year to 7.5 bcm.

The project is considered by the EU as “of common interest” and is deemed “essential to the integration of the European energy networks.”

Pawel Jakubowski, CEO of Polskie LNG, said the LNG deliveries and Norwegian gas supplies could reorientate the central European gas market by creating north-south gas routes to replace the existing east-west links, weakening reliance on Russia.

Poland is also planning the construction of new gas links to the Czech Republic and Slovakia (scheduled for 2019), Lithuania (2021) and with Denmark (2022). A new gas pipeline to Ukraine is also under consideration.

The economic viability of the pipeline has been questioned, but the Polish government believes the price of diversification is worth paying given how much the country has paid for not having diversified in the past.

Tatania Mitrova, who is an expert in Russian gas, said that the long-run marginal cost of Russian pipeline gas into Europe is $5.2/MMBtu, which includes a $2.1/MMBtu export duty, which compares with around compared with about $7.5/MMBtu for US LNG.

The Russian question

Gazprom CEO Alexei Miller believes otherwise. “There is no doubt that pipeline gas supplies from Russia will always be more competitive than LNG deliveries from any other part of the world. It goes without saying.”

Several experts agree. “I see little if any evidence that Polish policy makers are interested in developing a competitive natural gas market, which is kind of a prerequisite for a natural gas hub,” Tim Boersma, Director of Global Natural Gas Markets at the Center on Global Energy Policy, says. “Instead, Polish policy makers have invested heavily in what are generally relatively expensive sources of supply, e.g. oil indexed LNG from Qatar, and are reluctant to implement EU legislation and open their market for competition.”

The aim in Poland, Boersma adds, has not been to grow the natural gas market at the expense of more polluting fuels like coal, but rather to replace Gazprom volumes at all cost.

Anna Mikulska, a fellow in energy studies for the Center for Energy Studies at Rice University, agrees. She argues that countries like Poland may be able to use LNG because it will be still cheaper than what they are used to paying. “But they could probably negotiate better prices with Russia if they wanted, since Russia has room to lower its prices considerably. Thus, the decision to use non-Russian gas will be more based in geopolitics and their experience and attitude toward Russia than actual economic calculus.

“Poland would probably have best chance of becoming a hub if, beyond LNG and Baltic Pipe, it would negotiate contracts with Russia to bring in Russian gas,” Mikulska says.

“I find it very difficult to see Poland becoming a major gas hub in central Europe,” LNG expert Andy Flower said. “The volumes of gas it will be able to import, excluding Russian gas, look to be too small.”

L'articolo Warsaw Throws its Hat into the EU Gas Ring proviene da InsideOver.

It was not spectacular, but then EU decisions rarely are. Fudge is often top of the menu in Brussels. But its effects may have long-term consequences both for Europe’s energy sector and its geopolitical position between the US and Russia.

“The new rules ensure that … everyone interested in selling gas to Europe must respect European energy law,” EU Energy Commissioner Miguel Arias Canete said in a statement on February 13.  This meant that existing EU legislation — the so-called  Third Energy Package — thus applies to the controversial Nord Stream II gas pipeline that is being built between Russia and Germany.

Owners of pipelines linking EU and non-EU countries, Canete continued, will be required to allow access for their competitors and Brussels will also have more power regarding transparency and tariff regulations.

With these words, the EU appears to have papered over the cracks appearing along the EU’s east-west axis. For now.

But some in the east still fear being steamrollered by Berlin as it ploughs ahead with the massive extension to the Nord Stream pipeline.

“This case does not contribute to European unity. Several member states have for a variety of reasons expressed deep concerns about this pipeline, and growing dependence of the EU on imports of natural gas from Russia.” Dr. Tim Boersma, Senior Research Scholar Director of Global Natural Gas Markets at Columbia University says.

Germany had fought to block the directive in the European Council, but couldn’t stop the rewrite, which pleases no-one.

A deal with France last week saw Berlin squeezing into the directive’s text the potentially crucial power to decide to ask for exemptions from EU rules.

“The Commission will take the binding decision on whether to grant the exemption,” the Parliament said in a press release. “If the member state’s assessment differs from that of the Commission, it is the Commission’s assessment which prevails.” But this in turn depends on the next Commission, whose composition will be set later this year after Europe elections in May. The key question will be whether future energy and competition commissioners will be sympathetic to Berlin’s views.

The Nord Stream II gas pipeline would concentrate almost all Russian exports to the EU into one route, doubling the amount of gas transported from Russia to Germany to 55 billion cubic meters (bcm) a year. Gazprom accounts for over 60 percent of European gas imports and plans to increase its exports to Europe to 200 bcm.

One man’s politics is another’s economics

After a meeting with the Ukrainian president, Petro Poroshenko, in Berlin, German Chancellor Angela Merkel recently admitted for the first time that the gas pipeline was “not only an economic but also a political project.”

“I think it is important to decode what one means as ‘political reasons,’” says Anna Mikulska, from Rice University in Texas.

“Russia and Germany have been vocal in portraying the revision to the gas directive as ‘political’ while portraying its own doings as “market based,” “economic” measures. On the contrary, many countries in Eastern Europe see the pipeline as a political project. The interesting part is that both sides underscore energy security – but how to achieve this ‘energy security’ is understood very differently. For supporters of the pipeline – transit is the key (i.e. away from Ukraine) and for opposing countries security of supply includes transit but also diverse suppliers.”

The US position

US Department of Energy Secretary Rick Perry has outright said moving US energy supplies into Eastern Europe is one a way of containing Russian influence.

“The Trump Administration supports Europe’s efforts to diversify its sources and supply of energy, reducing the region’s reliance on a single source and mitigating its vulnerability to Russia’s use of energy for political coercion. Therefore, the US will continue our strong opposition to Nord Stream II and a multi-line Turk Stream,” Deputy Secretary of Energy Dan Brouillette said this week.

“We are encouraged by the European Commission’s action to increase European energy security by increasing oversight of the Continent’s offshore energy infrastructure, including Nord Stream II. We hope this move will help our EU partners hold Gazprom accountable to Western standards.”

“The US supports the diversification of infrastructure projects in Germany and throughout Europe, and hopes this will open up opportunities for additional supplies of natural gas imports. As President Trump and Secretary Perry have made clear, the US wants to provide Europe with a reliable energy alternative. We hope to continue working with our allies in Europe on strengthening their energy security and prosperity.”

Last July, European Commission President Jean-Claude Juncker agreed to work towards shipping more US gas to Europe. After a meeting at the White House, US President Donald Trump said: “The EU wants to import more liquefied natural gas, LNG, from the US and they’re going to be a very very big buyer.” Juncker said the EU would build more terminals to import LNG. There are currently about 30 LNG terminals in Europe.

US gas explosion

By the end of the decade the US is expected to have five major LNG export projects operational, becoming the third largest LNG exporter after Qatar and Australia. The US now has two liquefaction plants in operation, Sabine Pass and Cove Point, with a shared capacity of 23.3 mtpa (metric tons per annum). Total exports this year will be around 20 mtpa. The country is launching nine LNG export projects with a collective liquefaction capacity of 36.7 mtpa, boosting capacity to 63 mtpa and in a “second wave,” federal regulators are set to decide on another 13 pending projects by the end of 2019.

Germany bending

Germany’s economy minister, Peter Altmaier, said this week he was confident his country would soon have two terminals capable of receiving shipments of US liquefied natural gas. Altmaier, a close ally of Chancellor Angela Merkel, aded that Berlin wants to resolve its differences with the US over plans for the gas pipeline.

Altmaier insisted that there had been no deal for the US to set aside its concerns about Nord Stream II in exchange for German support for the building of terminals for LNG.

Others are less convinced.  “Germany generally seems to get its way in Europe – it controls the purse strings so the EU will generally do what it wants with the net recipients of German largesse not making their protests too loudly in case it puts the money flow at risk,” an expert on LNG, Andy Flower says. “Macron is probably the only leader who could challenge the German position but the protests by the yellow vests has made him too weak to stop Germany doing what it wants to do.”

“As to Germany and its role, I think there is a concern that Germany’s ability to push through despite opposition can be seen as detrimental to the unity of the EU,” Mikulska says. “This is probably even more underscored by the agreement between France and Germany as to the limited revision of the directive. This excludes other countries where the pipelines crosses from any decision regarding possible exemptions etc. from the EU law. In the case of NordStream it gives say to Germany. In a way we see again the division that exists between generally speaking EU’s Western members and EU’s East (new post-Soviet members). And possibly it can become even more pronounced if Germany unilaterally pushes for exemptions for the pipeline. One thing that I have noticed reading Polish media and listening to arguments of some of energy experts there: there is a great deal of distrust and suspicion toward Germany and actions that are seen as motivated by Germany’s desire to assume a position of hegemony in Europe.  I don’t think this is actually always deserved but nonetheless such strain of thought exists and is quite influential. A unilateral move by Germany to exempt NS2 etc. from the directive would probably created more distrust and add fuel to those theories,” Mikulska says.

German energy needs

With its last nuclear plant shutting down in 2023, coal in terminal decline and the phasing out of Dutch gas, Germany faces a medium-term challenge of how to secure stable energy sources. The Netherlands’ huge Groningen gas field is seen lowering its production, with operations at the field falling to 12 bcm by 2022, and will be terminated by 2030.

Germany announced plans to build a $500-million (€420-million) liquid natural gas (LNG) terminal on the Elbe river in the north. Brunsbüttel would be open by the end of 2022.

The German Ministry of Economy and Energy has said it supports private initiatives for Brunsbüttel. “The terminal could help to avoid dependences and diversify energy supply. Moreover, it would contribute to security of energy supply, since it offers access to the global LNG market for German clients,” German LNG Terminal spokesperson Katja Freitag said.

A final investment decision is expected at the end of 2019, Freitag added.

Not far from an old nuclear reactor, the terminal would be within reach of Scandinavian markets and the Baltic States via the Kiel Canal. It would be able to import as much as 5 billion cubic meters per year, or about 10 percent of Russia’s current annual deliveries to Germany.

Russian gas anyway

Interestingly, Russia also emerged last year as a key player in the LNG market after US sanctions on Iran and its trade spat with China pushed Beijing into increasing imports of Russian oil and LNG. Russia operates two LNG export facilities, including the recently commissioned Yamal LNG project in the Russian Arctic.

Yamal LNG has doubled Russian LNG output to just over 20 mtpa, making the country the fifth-largest LNG exporter in the world.

Compromise?

“The two sources – Russian and American – can be complementary and the more diversification the better,” Kirsten Westphal, senior associate at the German Institute for International and Security Affairs, says. “An LNG Terminal in Germany is interesting, but not a necessity as Germany is well connected to other LNG terminals and thus flexibility in the integrated north western European market is high,” she said. “In the case of natural gas, cheap Russian gas could be used for the baseload and spikes and peaks could be managed using US LNG.”

To confuse matters further, Russian President Vladimir Putin is also now reportedly considering continuing to ship Russian gas across Ukraine, rather than bypassing the country entirely by the end of next year.

L'articolo EU Gas Deal Papers Over Cracks in East-West Spat   proviene da InsideOver.

When Polish authorities arrested a Huawei employee for espionage in December, under heavy US pressure, Central and Eastern Europe’s relationship with China flitted – albeit briefly – onto the world’s news screens.

But when reporters honed in on the story, it soon turned out to be about how little Poland and the CEE region actually matter in the emerging geopolitics of Sino-EU relations.

“Any geopolitical ambitions China may have in CEE would be no more than securing friendly passage into the economic and political heart of a wider Europe rather than winning over lesser consequential parts of it,” Bob Savic, Senior Research Fellow at the Global Policy Institute in London, said.

Poland was publicly admonished by Beijing and then ridiculed in the Chinese press as a country with nothing worth stealing.

But Beijing’s ire represents a new phase in a relationship that seemed to be going places in 2012, when the then Chinese premier Wen Jiabao announced the start of the so-called ‘16+1’ initiative, a strategy for encouraging trade between China and Eastern Europe. The goal he set out was to hit $100 billion in mutual trade between China and 11 EU member states in the CEE and SouthEastern Europe (SEE) and five aspiring ones by 2015. At $90 billion it was almost there in 2018, but with most of it going one way, some CEE countries are now starting to ask if it was worth it after all.

Beijing looking at Berlin, not Warsaw

Germany remains Beijing’s principle target, both politically and economically, and Berlin’s decision on what to do about Chinese telco Huawei’s involvement in its 5G new generation internet rollout is far more important to Beijing than anything that happens in Warsaw, Prague or Belgrade.

The Polish government has in turn grown frustrated by lack of progress in economic cooperation with China. A large trade deficit and barriers to access to the Chinese market have become key issues and Minister of Internal Affairs Joachim Brudziński said recently that a ban on Huawei equipment in the Polish market is under consideration.

“Polish officials deny any connection between the detention and statements on Huawei’s position in the Polish market. But the coincidence in the timing of the events looks hardly accidental,” says Łukasz Sarek, a researcher and China market analyst in Warsaw.

“The 16+1 format was considered as a China-led bloc with the EU and western powers excluded and lackluster progress on economic issues would be partially offset by political benefits,” he says.

Meanwhile, Poland and Hungary and the others believed in return they could leverage their position within the EU and use the Chinese card to press Brussels and Berlin for concessions.

“But China’s offer is less attractive than that provided by the EU,” Sarek goes on. “And cooperation with China comes with risks such as the increased activities of Chinese intelligence, pro-Chinese lobbyists, Chinese companies penetrating critical industries and murky Chinese business operations,” Sarek says.

In fact, he adds, China has gained more influence in western European countries such as Italy, Portugal than in the CEE region.

“After Brexit Beijing’s main partners in the EU are Berlin, Brussels and Paris. Chinese leadership does not want to endanger relations by being too active with the creation of a pro-Chinese bloc within the EU.”

Lack of spring in Prague’s step

It is similar in the Czech Republic. There have been a number of Chinese acquisitions in the country worth around 1 billion euros. Even some Czech businesses have been relatively successful in China, such as the traditional Czech car maker (owned now by German VW) Skoda and financial company Home Credit.

However, as in Poland, there has been a similar realization that attempts to profit from improving relations with China are largely futile. The Chinese acquisition spree in the Czech Republic was conducted by a single entity – the CEFC – and was driven by debt-financing. In 2018, the company’s chairman, Ye Jianming, was arrested in China.

The National Cyber Security Center issued a warning in December against Huawei and ZTE products based on the legal and political conditions in China that require those firms to cooperate with intelligence services. Huawei had already been precluded from competing in a tender to build a tax portal.

“The common denominator for both Poland and the Czech Republic is the perception that they have few economic results to show for six-plus years of attempts to develop ‘pragmatic cooperation’ with Beijing under the umbrellas of the 16+1 platform and the Belt and Road Initiative (BRI),” Alicja Bachulska, who works as a Chinese politics analyst at the Asia Research Centre, War Studies University in Warsaw, said.

China gets what China wants

“The Chinese Communist Party ensures State Owned Enterprises and private strategic industries make foreign investments that support the country’s economy, foreign policy, and internal security,” Nicholas Eftimiades, a lecturer at Penn State Harrisburg School of Public Affairs, says.

“This policy was made clear by Xi Jinping. Major Chinese investments in Europe, as was the case with Greece, are designed to be economically profitable and support China’s foreign policy aims. This goal is ensured by the internal Communist Party Committee required in all large private companies and State Owned Industries. This is quite a different concept from the West where private investment practices and government goals and objectives can be at odds with each other.”

Beijing wants political support over its human rights record and abuses in Xinjiang and Tibet, conflicts on South China Sea, growing rivalry with US, Taiwan status, reshaping and reforming international institutions (UN Security Council and various agencies, IMF, World Bank, WTO), Arctic and Antarctic status.

But Chinese investment is less than 1% of overall foreign direct investment (FDI) in the CEE region, and more than 90% of Chinese FDI into the EU goes to Western Europe.

In the developed world, China attempts to gain access to top-notch technologies and brands; in the developing world access to raw materials and infrastructure building projects. Central Europe stands somewhere in between the two, with unclear potential and a little-known environment.

Most of China’s relations with individual CEE states tend to be lower-ranked partnerships, such as “friendly cooperative relationships” with Bulgaria and Romania, a “friendly cooperative partnership” with Hungary. China ascribes slightly higher level relations with the Czech Republic in the form of a “strategic partnership” and higher still with Poland, Hungary and Serbia entitled as a “comprehensive strategic partnership.”

EU and 16+1: are they compatible?

A prosperous, united and strong Europe is in China’s best interest, the Chinese envoy to the EU said recently. Zhang Ming, in an interview with The Financial Times had been asked if China was trying to use the “16+1” mechanism to divide the EU.

Not everyone is convinced. EU Commissioner Johannes Hahn last year warned of the danger that Balkan states risked becoming “Trojan horses” for Chinese influence.

And others are even more blunt in their assessment. “One of the reasons why China is engaged with Eastern European countries is to break up the EU,” says Marcin Przychodniak, an analyst at Asia-Pacific program at the Polish Institute of International Affairs in Warsaw.

“If you define the EU as a loose, a la carte, political club then 16+1 is not necessarily against the bloc, but if you define it the way the EU defines itself as a closely integrated club with specific standards, rules and policies then the 16+1 system is not compatible with the EE,” Vuk Vuksanovic, a Ph.D. researcher in International Relations at the London School of Economics, says.

China, furthermore, prefers to pursue projects based on direct agreements with governments and these tend to include provisions on credit lines with state guarantees of repayment and selection of Chinese contractors, which use Chinese materials and labour. Construction projects in the EU require public calls for tenders and China’s use of credit lines to finance the projects is also troubling, being neither an investment nor a grant, as EU rules stipulate.

For CEE countries whose EU funding will slowly be ending after 15 years, high Chinese interest rates on loans and ongoing access to EU structural funds may push Warsaw and Prague back into Brussels love nest.

Sea-change in the EU

Meanwhile, China’s relationship with the EU encountered a number of setbacks in 2018, the latest being the tightening of foreign direct investments by the European Commission. In December Germany made it even harder by establishing new rules against foreign acquisitions of German companies in technology.

Overall Chinese investment volumes in Europe last year fell by 46% to reach $31.2 billion (€27.3 billion). Roughly one-third of that money flowed to Germany where the Chinese invested $10.7 billion, marking a 22 percent decline.

Serbia and Hungary remain Beijing’s gateway

But China still seems to have a foothold in Hungary and Serbia.

Hungarian Prime Minister Viktor Orbán said recently that China was in pole position while the CEE region would become the “engine” driving Europe’s economy in the next 5-10 years. He said China should not be handled with any ideological prejudices. “It should be accepted that we are different and manage our countries differently,” he said, adding that the point was “not to pass judgement but promote mutual interests.”

Meanwhile, Beijing has engaged in a number of massive projects in the Balkans, although the most high-profile one, the Belgrade-Budapest high-speed railway, has failed to materialize so far.

“It would not be immodest or wrong to call Serbia China’s main partner in Europe,” according to Minister for Construction Zorana Mihajlovic.

He declined to mention the small fact that China exports $1 billion in goods to Serbia, whereas Serbia exports $1 million of goods to China.

L'articolo Is China losing Eastern Europe? proviene da InsideOver.